European Union: Demystifying SPCs

Since the Supplementary Protection Certificate (SPC) regime came
into effect in 1992, SPCs have become a critically important aspect
of the European IP landscape. However, with national patent courts
referring many SPC cases to the European Court of Justice (ECJ),
and ECJ judgments themselves drawing criticism for lack of clarity,
industry and practitioners have at times been left with more
questions than answers about this niche but critically important
field of IP law. As a result, it remains a frequently misunderstood
area of intellectual property.

This chapter puts SPCs into commercial perspective by looking at
the background and key principles of the SPC regime, as well as
relevant case law, with a view to providing a refresher for those
with a pre-existing interest in this area and a primer for those
new to SPCs.

What is an SPC?

SPCs are standalone IP rights that can be granted to owners of
biopharmaceutical and agrichemical patents to provide a further
period of protection for products protected by such patents. SPCs
are governed at a European level by EU regulations, particularly
the EU SPC Regulation (469/2009). Cases involving questions of the
governing principles of the SPC Regulation must be referred by
national courts to the ECJ.

The further term of protection is intended to compensate
innovators whose path to market for new products is delayed by
essential regulatory processes. The requirement to obtain
regulatory approval, in the form of a marketing authorisation, is
central to the SPC system. The authorities will grant a marketing
authorisation only once they have established that the product is
safe and effective by evaluating data generated by trials. As a
result, obtaining a marketing authorisation is an expensive and
time-consuming process which delays the launch of products.

This delay means that the window available for a patentee (or
its licensees) to recoup their development costs and profit from
their innovations is often greatly reduced. The SPC regime was
introduced to compensate inventors for the financial losses that
would otherwise be caused by this delay.

What is the duration of SPCs?

The length of the term of the further protection granted by an
SPC is determined by rules set out in the SPC Regulation and was
central to the recent ECJ decision in Seattle
Genetics.

The rules allow for up to five more years of monopoly protection
after the patent has expired. The term is calculated as the length
of the delay between patent filing and the date of the first
marketing authorisation in the European Union, minus five years, up
to a maximum of five years. It was intended that the additional
period afforded by an SPC should provide a patentee with an overall
maximum exclusivity period of 15 years, dating from when the
product obtains a marketing authorisation.

Before Seattle Genetics, it was unclear whether
the length of the term of an SPC was calculated using:

the date of notification of the relevant marketing
authorisation; or

the date of the decision to grant the marketing
authorisation.

The ECJ held that it is correct to use the date of notification.
The term of the SPC in Seattle Genetics was
increased by five days.

The term of an SPC can be extended by a further six months by
way of a 'paediatric extension'. These extensions are
intended to incentivise and reward the development of medicinal
products for children and are granted when a paediatric
investigation plan has been completed to the satisfaction of the
regulator. This additional period is not available for orphan
drugs. Instead, the orphan drug marketing exclusivity period is
extended by a further two years.

How do you obtain an SPC?

SPCs are national rights, so SPC applications must be filed at
national patent offices. This is unlike European patents where a
centralised application is filed at the European Patent Office
(EPO), resulting in patents being granted in the European countries
designated in the application.

The basic requirements to obtain an SPC are set out in Article 3
of the SPC Regulation:

(a) The product is protected by a basic patent in
force;(b) A valid authorisation to place the product on the market
as a medicinal product has been granted...(c) The product has not already been the subject of an SPC;
and(d) The authorisation referred to in (b) must be the first
authorisation to place the product on the market as a medicinal
product.

Of these, Article 3(a) is arguably the most contentious and has
caused the most litigation. As defined in the SPC Regulation, a
'product' is the active ingredient or combination of active
ingredients of a medicinal product. 'Medicinal product'
means any substance or combination of substances presented for
treating or preventing disease in human beings or animals. However,
the ECJ has ruled that the product can be an active ingredient of a
number of active ingredients (as opposed to the only active
ingredient). Therefore, it is possible to obtain an SPC for a
single product (ie an active ingredient) even if the marketing
authorisation is for a combination.

What test is used to decide whether a patent protects a product
under the SPC Regulation?

No single, simple test can assess whether a patent protects a
product in this context. The answer depends on the nature of the
patent (with product, process or functional claims), the scope of
its disclosure, what is expressly or implicitly stated in the
claims and the inventive concept.

Despite there being many references on this topic, the ECJ has
been unclear in its answers. In summary, the ECJ has stated that
the product must be "identified, specified or mentioned"
in the claims of the basic patent covering combination products.
However, it is by no means clear that this is a universal test
covering all scenarios.

In Eli Lilly v HGS the ECJ provided some
guidance, holding that in principle an SPC can be granted even if
the active ingredient is not mentioned by name in the claims,
provided that "the claims relate, implicitly but necessarily
and specifically" to the active ingredient in question. The UK
court interpreted the ECJ's guidance, refusing to rule out the
possibility that an SPC could be granted based on claims that
identify a product only by its function.

A number of questions remain:

What is specifically meant by 'specified, identified or
mentioned'?

What about Markush claims (ie, where a product is identified
but only because it falls within a general formula)?

What about patents in which products are defined only by where
or how they bind to targets (ie, so that any number of molecules
might bind to the target)? Have they all been
'specified'?

Should the scope of the innovative contribution be taken into
account?

This is an area with many unanswered questions. More references
can be expected from national courts to the ECJ to clarify these
issues and provide greater certainty.

What is the scope of protection of an SPC?

The protection afforded by an SPC is dictated by both the patent
and the marketing authorisation.

The marketing authorisation dictates what the product is, in the
sense that it must be an active ingredient of the medicinal product
that is the subject of the marketing authorisation. The patent also
limits the scope of the SPC. For example, if the patent protects
only a method of manufacturing a product, the SPC will protect only
the patented method for the particular product, and not the
product per se. The result is that both the patent
and the marketing authorisation have the effect of limiting the
scope of SPC protection.

However, products falling under the scope of SPC protection are
protected in any presentation, whether as a monotherapy or in
combination with other active ingredients, as confirmed by the ECJ
in Novartis v Actavis.

How many SPCs can be granted for a particular medicinal
product?

Generally, the SPC regime allows for one SPC to be granted to a
patentee for a particular product. Careful choices must be made
regarding which patent should be chosen by a patentee and how the
product should be defined.

In certain circumstances, it may be possible for a patentee to
obtain more than one SPC for one product. For example, an SPC might
be granted for a product consisting of two active ingredients in
combination. That SPC will protect against a competing combination
product. If the patentee is later granted a patent for only one of
the active ingredients (a monotherapy), in theory, a second SPC
could be obtained for the product of the monotherapy. This second
SPC would be capable of preventing any competing product containing
the active ingredient from being launched, either as a monotherapy
or combination therapy.

However, if the monotherapy SPC were applied for first, no
second SPC could be granted for the combination product because it
would already be protected by the monotherapy SPC.

Can a patentee obtain an SPC if they are not also the marketing
authorisation holder?

What if the patentee does not own the marketing authorisation
for the product and the patentee and the marketing authorisation
holder are not commercially linked? Is it then possible for the
patentee to apply for an SPC based on the third-party marketing
authorisation?

In Eli Lilly v HGS the UK court held that
there is no reason in principle why an SPC cannot be granted to a
patentee based on a third-party marketing authorisation. The UK
court noted that the purpose of the SPC Regulation is to encourage
research and development generally, not just with a view to
commercialising products.

Must the product named in the application be an active
ingredient, or can it be a combination of an active ingredient and
an enabling ingredient?

A number of cases on this topic have been referred to the ECJ.
In these cases the primary active ingredient was administered with
other compounds which either increased its effectiveness or aided
its release. The ECJ has been clear in its decisions: essentially,
if the additional ingredient does not have a therapeutic effect in
and of itself, it cannot be considered to be an active ingredient
and no SPC will be granted for the combination.

The flip side of this ruling is that the other ingredient is
considered to be an active ingredient if has any active effect
– even if this active effect is not the reason that the
substance is being included in the medicinal product.

What is the meaning of 'placing a product on the
market'?

In one particularly notable ECJ decision (Neurim), an
SPC was granted for a product even though the same active
ingredient had previously been authorised and placed on the market
in the European Union – albeit for use as a veterinary
treatment. At first sight, this decision appears to contradict
directly Article 3(d) of the SPC Regulation.

Importantly, this case featured two separate patents and two
marketing authorisations: one set for the initial veterinary use
and the other – the 'second medical use' – for
human use. In allowing the SPC the ECJ held that authorities must
consider whether there is a link between the product, the patent in
question and the marketing authorisation. If no such link exists, a
previously authorised product may not be subject to a first
marketing authorisation if the product for the first use would not
have been protected by the patent in question. If a previously
authorised active ingredient is used in a new patented way, and the
patent would not have covered the first use, the marketing
authorisation for the second use could still count as the first
marketing authorisation of the product; thus, an SPC could be
granted.

This decision was welcomed by pharmaceutical companies because
it allowed for scientific research and development to be rewarded.
Arguably, it opens the door for patentees to apply for SPCs based
on second medical use patents even when the active ingredient has
been subject to much older (and irrelevant) marketing
authorisations.

What is a negative term SPC?

So-called 'negative term SPCs' are SPCs in which the
period of SPC protection would expire before the end of the term of
the patent. At first glance makes little sense – why apply
for an SPC that will expire before the patent itself has
expired?

The answer lies in the additional protection period that can be
granted as a result of a paediatric extension. If the SPC expires
within six months of the date of patent expiry, it could be worth
obtaining the SPC in order to obtain the additional six-month
extension – especially if the product is particularly
commercially successful. This approach has been endorsed by the
ECJ.

Will SPCs come under the jurisdiction of the Unified Patent
Court?

If they have been filed on a European patent, SPCs fall within
the jurisdiction of the Unified Patent Court unless they (or, if
the SPC application is still pending, the underlying European
patents) have been 'opted out'. Thus, SPCs based on
national patents (ie, granted by a national office) will fall
outside the jurisdiction of the UPC.

Conclusion

There is no doubt that SPCs are extremely valuable, both in
terms of protecting sales revenue and as an effective deterrent
against generic companies. National courts continue to refer cases
to the ECJ and, as a result, law in this area will continue to
develop.

It is therefore imperative that companies implement robust
strategies for keeping updated on developments in this field and
obtaining and enforcing SPCs that will maximise the profitability
of their patents. These strategies should be devised with input
from legal, commercial and regulatory departments. The aim should
be to obtain the most robust SPC protection as possible, with an
eye on potential litigation as the SPC draws towards the end of its
life.

This article first appeared in Patents in Europe
2016/2017, a supplement to Intellectual Asset
Management, published by Globe Business Media Group – IP
Division. To view the issue in full, please go towww.iam-media.com.

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